Companies overseeing Iowa's privatized Medicaid say program is 'drastically underfunded'

Three managed care insurers charged with running Iowa's Medicaid program said the project has been thwarted by a lack of funding, with one company calling its participation a "catastrophic experience," according to documents obtained by The Des Moines Register.

The payers – Amerigroup, AmeriHealth Caritas and UnitedHealthcare – said reimbursement rates provided to the companies were based on incorrect cost estimates before the Medicaid program commenced.

An executive of one of the managed care companies told state officials Iowa's plan to allocate an extra $127.7 million in state and federal funding toward the program in this year's budget "is not acceptable," and the program may become unsustainable without significant changes. The companies have reported hundreds of millions in losses on the program, according to the report.

Iowa Gov. Terry Branstad (R) said the losses were expected as program set-up costs. Gov. Branstad said in October the companies would receive an additional $33.2 million in state funds and $94.5 million in federal funds this fiscal year to help cover unexpected costs.

Iowa's privatized Medicaid program took effect April 1 of this year.  

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